Volume I, Issue Number 2
By Calvin D. Johnson
July 7, 1998
Greetings again!! Welcome to the second edition of
Banking Connections from the BCS Marketing Department. The
second quarter of 1998 has come and gone, and all I can say is:
WHEW!! I have been involved with the financial services industry
for almost 30 years, and I cannot recall a 90-day period of such
hectic activity. It was like sharks on a feeding frenzy. In one
week’s span we had several of the largest merger and acquisition
deals ever announced. First there was the $70 billion union of Citicorp
and The Travelers Group that creates a truly global diversified
financial services behemoth.
While the market was still dazed by this powerful
merger, it was followed closely by two others being announced from
New York’s Waldorf-Astoria at the same time. Taken alone, the $30
billion merger of Banc One Corp. with its Midwestern neighbor, First
Chicago NBD Corp., would seem pretty big, creating the country’s
sixth-largest bank, with assets of about $240 billion spread across
However, down the hall, NationsBank and Bank America
were touting their $60 billion transcontinental marriage. Talk about
If that wasn’t enough, Norwest announced its take-over
of embattled Wells Fargo, Banc One completed its acquisition of
Louisiana-based First Commerce Corp, and Union Planters of Memphis
made moves into Florida and Missouri. Star Banc of Cincinnati is
becoming a major player in Kentucky through its acquisition of Trans
Financial Inc. of Bowling Green and is also moving north with its
recent deal to take over Milwaukee-based Firstar.
It wasn’t just the big guys making all the moves.
Georgia’s Flag Financial Corp. has been on a nine-month buying spree.
Flag, based in LaGrange, announced the first
merger deal in its 12-year history last October, when
it agreed to combine with Middle Georgia Bankshares of Unadilla.
Since then, the $425 million-asset company has announced plans to
buy four other banks in central and southeastern Georgia. In fact,
in the first half of 1998, banks with less than $3 billion in assets
have been targets in almost 200 merger announcements, about 15%
ahead of last year’s pace. About the only deal that did not get
done was Bank of New York’s failed assault on Mellon Bank.
However, these merger announcements may not have been
the most significant news in the financial services industry. While
Hugh McColl of NationsBank was claiming to have created the country’s
first coast-to-coast bank, two little banking companies based in
Atlanta had already trumped him in that regard. Both Atlanta Internet
Bank and Security First Network Bank have long had customers from
all 50 states. I think one of the most meaningful news stories came
from Atlanta Internet Bank.
Although not making the headlines of the multi-billion
dollar deals, Atlanta Internet Bank announced its first profitable
quarter this past quarter, and it is barely a year old. Deposits
at AIB have increased over 185% in 1998, and shares of AIB’s parent
company, Net.Bank, are up over 150% this year. As further validation
that the Internet is a valid financial services delivery channel,
Security First Network Bank saw its stock price increase over 70%
during the second quarter, making it one of the leaders for Georgia’s
publicly traded companies and is up over 106% for 1998. SFNB has
sold its banking charter to Royal Bank of Canada and will metamorphose
itself into an Internet financial services software company, Security
First Technologies, in August. A mysterious, yet-to-be-named financial
services organization has made a $10 million investment in this
new entity. A more in-depth look at Atlanta Internet Bank is part
of this issue of Banking Connections.
Keep your eyes on these two similar, yet distinctively
different, organizations as models for new ways of delivering financial
services to the marketplace.
In banking these days, size is a big deal. The huge
values and rapid pace of the mergers now sweeping America’s financial
services industry are the evolutionary results of the consolidation
that started more than a decade ago. As in-state banking turned
into regional banking and then into super-regional banking, the
drive was for cost savings and for efficiency. Now, what we are
seeing is major stakes race to build empires that can ramp up revenue
while having the geographic and customer diversity to withstand
local economic downturns. Stay tuned, I am sure there is still more
As a parting thought, NationsBank has announced a
major acquisition over Labor Day weekend for three years in a row.
I wonder what news will be coming out of Charlotte this September???
It seems to me that there is a geographic void in their franchise
in the Northeast, where their cross-town rival First Union has already
staked out a nice network. If I were BankBoston or Fleet Financial,
I would not make any holiday plans just in case the phone rings!!!
I hope you find this newsletter useful, and I look
forward to any feedback that you may care to offer. Contact me by
Lotus Notes or e-mail me at calvin.d.johnson @bridge.bellsouth.com.
Better yet, pick up the phone and call me at 404-728-7285. I look
forward to working with you and your customers in the future.
Happy Reading and Good Selling!
How Does A Bank Strike A Balance Between High Tech
and High Touch?
This is an exciting time in banking and technology.
Breakthroughs like those discussed at the last Retail Delivery Systems
conference by Bill Gates of Microsoft Corp. and Lew Platt of Hewlett-Packard
Co. painted a vivid picture of what can be. More and more, it is
becoming apparent that the real name of the game in banking today
is profitable revenue growth. The important focus is now on how
technology serves that goal, and this article will describe some
of the critical components of that process.
Bank executives around the world are all challenged
with aggressive growth plans -- 12%, 15%, 18%, 20% a year. It is
in that ambitious context that bankers have invested so heavily
in information and technology. The results so far are mixed. On
the positive side, according to the Department of Labor, in the
third quarter last year U.S. workers' productivity showed the biggest
gain in five years. Technology investments may have finally begun
to show results.
The bad news is we cannot correlate spending on information
and technology with greater profitability. The technology survey
report by American Banker and Meridien Research confirmed "there
is little agreement about the impact of this technology spending
($50 billion in 1997) on the banking industry's profitability."
If this were football, we would be in the red zone
-- within 20 yards of scoring a touchdown. In other words, when
it comes to investing in bank technology we have made significant
progress. We have traveled almost the full length of the field and
have a few critical yards to go. One thing to keep in mind is that
when you get to the red zone, expectations rise. Investors and analysts
expect that if we have gotten this close, we ought to be able to
score -- to show more profitable revenue growth.
However, the yardage gets tougher in the red zone.
Acquiring the information and technology has been a significant
accomplishment. The endgame is harder. It involves skills that most
simply do not have today. To succeed, we will have to develop what
is called "market competence" -- the ability to use information
and technology to get the right sales and service through the right
channel to the right customers at the right cost.
Acquiring the new competence involves three requirements.
First: Technology must seem valuable to the customer.
The press paints a mixed picture of customer value. We can point
to advances like personal computer banking, home banking, Internet
banking, voice response units, telephone service centers, credit
scoring systems. But when we listen to customers, it is clear they
see things differently.
Here are some of the dichotomies:
We say our new technology lowers the cost of transactions.
But customers ask why, if costs are lower, they are seeing more
and higher fees. We say our new data warehouses and data mining
tools let us send very specific direct mail with specific messages
tailored to the right customers. They say they are flooded with
mail, most of it junk that doesn't bring value. We say our new phone
centers let us contact customers with messages tailored to their
next needs. They complain about getting too many calls from people
who clearly don't know who they are or what they value.
Customers are investing more money in caller ID and
call blocking than we are in targeting them. We say our new segmentation
technology lets us deliver very specific value propositions, exactly
fitted to specific types of customers. They wonder why, when they
come into a branch and then do business with the phone center, the
value proposition can't follow from one "silo" to another. We say
technology lets us remove some of the human factor so that we can
offer a more consistent approach to the customer. But customers
say the last thing they want is a less inspired, less able, less
knowledgeable, more programmed response to their needs.
So customers are pushing back. According to American
Demographics, "U.S. corporations now lose half of their customers
in five years, half of their employees in four years, and half of
their investors in a matter of months." We are talking about a very
transient group that obviously does not see sufficient value to
warrant lifelong relationships.
There is more at stake here than losing wallet share.
What happens when we also lose access to customers? If we are going
to score from the red zone, we need to take the information and
technology that add value for us and make sure they also add value
for the customer.
Which brings us to the second requirement: Technology
must become a major competence for the organization. To create value,
it takes better information about customers and better ability to
analyze the information. And it takes more channel options to give
customers more variety, convenience, and flexibility. These are
areas where banking shows progress. So in this respect we are well
prepared for the next level of success. But there is a gap. Peter
Drucker, noted author on management and organizational behavior
issues says, "Information develops rapidly; competence develops
slowly." If we are really going to see a different outcome, we need
to do things differently, and that means a new level of competence.
In "The Future of Banking, Part II," the former Donaldson,
Lufkin & Jenrette analyst Thomas K. Brown delineated the three
traits that will set successful organizations apart from the rest:
"They will have engaged employees; they will operate with a clear
vision that is understood throughout the organization; and they
will be leaders in sales and marketing execution."
How do we make sure we have engaged front-line employees
who have a clear vision and are able to execute? Robert Benson,
professor of information management at Washington University, said
in Information Week, "It's what the organization does to use information
and reach out to customers that counts. The purpose of IT (information
technology) is to change the behavior of its users to better achieve
their business objectives." But for most banks we work with, if
the mission of IT is to change behavior, the current capability
of IT is really just to change the technology. A crucial question
is, Who is in charge of making sure behavioral change actually flows
out of the new information and technology and winds up as value
for the customer? Most banks have not established this accountability.
Which brings us to the third requirement: Technology
must enable new behavior. It must help individuals think differently,
make different decisions, behave differently. Market research shows
that the average front-line banker makes 25 to 40 decisions a day:
to waive a fee or not, to refer a customer or not, or to profile
a customer or not. The incriminating fact about all our technology
spending is that it has rarely changed the actual behavior that
matters to customers. Decisions that matter to customers (and the
bank) continue to be made independent of our new data warehouses,
mining tools, and decision support systems.
Banks have demonstrated competence in managing transactions.
They have the necessary operating systems and can track where a
transaction enters, where it goes, how it is handled, and where
it ends. But there is no system or process for all those critical
25 to 40 decisions. What banks need is an operating system for customer
optimization. It would absolutely ensure that in every market and
in every instance, the front-line banker would know exactly what
value proposition would be most meaningful for the customer and
the bank -- and would also have the skills, judgment, and tactics
to make the value proposition come to life.
This operating system involves a new category of technology
-- not the kind that justs facilitates transactions, but technology
that enables behavior that matters to customers. Reaping technology's
reward means conquering a new challenge for banking, melding the
formerly separate worlds of technology and behavior. There was a
time when most assumed technology was the answer. Then we learned
it is not technology, it is behavior. And now we have come full
circle, closing the loop. It is still behavior, but it is technology-enabled
-- a brand new kind of technology.
CALL CENTERS IN BANKING
How Can Banks Profit From These Technology Investments?
As bankers attempt to serve more and more customers
through lower cost delivery channels, millions of dollars are being
invested in call center technologies. Measurement of the return
on these investments remains somewhat elusive, and lessons are just
starting to be learned concerning the Do’s and Don’ts in call center
design and operations. Let’s explore some of these issues.
In an industry defined by the paradox of missed expectations
and ever-higher goals for call centers, PNC Bank may well provide
a glimpse of the promised land.
The 1,000-person National Financial Services Center
near the company's Pittsburgh headquarters handles 150,000 calls
a day (about 70 percent of those within the voice response unit),
supports more than 300 products and services and is fast becoming
multi-media-capable for everything from 800 daily fax inquiries
to urgent electronic mail.
The center, which opened in 1995, was preceded by
a $400 million investment in a single platform and data center.
Today, the company is able to extend its reach far beyond the Alleghenys.
"The motivation was to provide a platform and a central site where
we could make the kinds of investments that were required to have
a world-class center and to be able to manage and measure it in
a way that made sense,'' says Joseph Guyaux, CEO of PNC Bank's regional
consumer bank, which includes the call center. "And [PNC plans]
to use that platform to leverage our reach where we would not be
limited just by physical buildings."
But PNC is clearly an exception. Experts say that
the good news is that after years of fumbling with how to pull together
once disparate call centers, bankers are integrating every point
of customer contact. The bad news is that most are not ready to
capitalize on sales opportunities.
Recent studies have shown many bankers are disappointed
because their costs did not drop as they had hoped when they made
24-hour access available. "We've seen that single channel users
have been converted into multi-channel users,'' says James B. Moore,
president and CEO of Mentis Corp., the Durham, NC-based research
firm which has studied bankers' expectations of their call centers.
"When you make it more convenient for consumers to transact, they
transact more often.''
That lesson is why Moore is convinced that bankers
will strategically invest in the call center as the point of integration
for all channels--and the launch point for cross-sell efforts. The
Tower Group forecasts that spending by bankers alone will top $500
million by 2001. Other experts predict that number will reach $1
billion when all other areas of financial services--from specialty
finance companies to insurers--are included.
And experts say the real return on investment will
come when financial services companies are able to turn every contact
with the customer into a customized sales opportunity. Virtually
no one is at that point today. Moreover, they say that most companies
have cultural hurdles to
understanding how to measure their return and few
are equipped to deal with a fundamental change in the customer relationship.
"Most of us never go into a physical outlet today. We deal with
our banks through the PC or on the phone.
There is no personal relationship,''
says Deborah Ingram, head of the financial services
group at AT&T Call Center Solutions. "If I can't have a personal
bond, what I have to do is emulate a personal relationship through
the kind of information that helps me really know that customer."
Ingram says that direct channels change both the speed
of service and who is in control. "When you have physical branches,
the speed of the way I choose to deliver service.
When you move to electronic methods, you shift control to the customer
and many aren't prepared for that,'' she says.
Mentis' research shows that 71 percent of the largest
institutions plan to integrate all their delivery channels through
the call center. To do that effectively, Moore says bankers will
need to emphasize specialized call center agents to handle specific
calls and technologists will need middleware that makes intelligent
call routing automatic. "This will be the backbone of the delivery
system because it embraces people,'' Moore says. "People sell and
One key indicator of call center performance potential
is whether customer service representatives are equipped to respond
to calls through the use of tailored scripts. Mentis found that
scripting is widespread among institutions of all sizes, but that
62 percent of those scripts were based on product ownership. About
one-quarter of those surveyed said they customized the script by
segmentation criteria such as age. A scant 8 percent said they based
such sales efforts on usage patterns--a practice which experts say
should be more widespread as information systems make
it possible to track product usage across all channels.
Beyond separate projects to build their data warehouses,
financial services companies are also focused on enhancing the connectivity
of the call center. In this high stakes chase for solutions, Moore
boldly predicts that the technology providers which solve these
problems will dominate banking technology. "This will be the intelligent
point for handling the customer across all points of the enterprise.
This will be a strategic high ground for a vendor. The vendor who
owns that high ground, like IBM twenty years ago, will own all that
flows from it,'' says Moore. "The shakeout is driven by the move
from client/server architecture to network-driven architecture.
This is the paradigm of choice."
But understanding the profitability of the call center
also depends on the ability to measure its contribution to the bottom
line. Customer activity is still credited to the branch--not the
channel which actually sold a product or service. Bankers concede
a need to shift measurements so they really know what works.
Larry Wilson, chief administrative officer of Norwest
Texas, says that profitability is still tracked at
the branch level even after the superregional opened a Texas-only
call center in Lubbock last fall. His solution is to not scrap the
current system, but rather set up a specialized system of allocating
costs and revenues at the call center. "We have found that this
is a common problem,'' he says. The lack of measurements is a residue
of bygone days when the role of call centers was viewed more narrowly.
"Years ago, call centers were just the back up to
the branch offices. They were really there for the overflow,'' says
Bob Sverak, vice president in the call center group at Charles Schwab
& Co., which handles 400,000 calls a day through its four operations
centers. "Today, we are the service arm of our branches, of the
More fundamental is how call centers are working toward
the goal of making a sales effort with every customer
contact. "The issue for most is how to turn the inbound call center
effort into a sales opportunity,'' says Tom Bolleum, CEO of Anytime
Access, which provides call center outsourcing for more than 200
institutions. "When someone has taken the time to call you, when
it is convenient for them, you want to be ready to make the right
offer. That is a dramatic shift for most banks.''
The same is true for insurance companies. Nate Natraj,
vice president and general manager of the financial services division
at Scopus, says that most insurers are only now offering term life
direct sales effort in response to non-insurance competitors.
Change does not come easily for an industry whose
beginnings were of agents selling policies door-to-door.
"Families don't want an agent sitting at their kitchen
table hounding them,'' says Ted Fortezzo, director of insurance
and finance at Telespectrum Worldwide Inc. in Omaha, NE. "Insurance
companies need to give consumers the ability to buy whatever they
want the way the want to buy it because the consumer is getting
That reality has forced insurers to adjust and has
created strong demand for companies which understand direct sales.
Last year, companies such as Colonial Penn Insurance Co. were acquired
for a premium nearly double that of traditional insurers. Carmel,
IN-based insurer Conseco paid $460 million for Colonial Penn.
Conseco chairman Stephen Hilbert says the acquisition
moves beyond simply buying the customers and capabilities of Colonial
Penn. Instead, he says the challenge is to automate sales, service
and customer information across diverse--and sometimes competing--channels.
Under his model, if the direct sales effort fails,
the household can be referred to a subsidiary which can attempt
a sale through direct mail, or possibly to one of the thousands
of local independent or staff agents who can try a face-to-face
"We have to be able to take advantage of all of those
possibilities to build our sales,'' says Hilbert.
INTERNET BANKING UPDATE
Good For Customers, Good For Investors!!
As mentioned in the Editor’s ,
despite all the hub-bub generated by the mega-bank mergers last
quarter, Internet Banking has continued to progess towards becoming
an accepted delivery channel for financial services. Here is an
inside look at a successful Internet Banking venture.
When Atlanta Internet Bank opened its office in Alpharetta,
Ga., two ladies came in to cash a check.
An employee obliged, but D.R. Grimes said, "Don't
The vice chairman and chief executive officer of Net.Bank,
the holding company for Atlanta Internet Bank, preferred that they
spread the word about the on-line service that was the institution's
main reason for being.
Net.Bank was incorporated in 1996, and the bank opened
in 1997 under the charter of one of its owners, Carolina First Bank.
That was a year after the one often called the first Internet bank,
Security First Network Bank, opened in Atlanta. Atlanta Internet,
like Security First, eventually received its own federal savings
Unlike Security First, which was described as a "proof
of concept" for technology marketed to other banks, Atlanta Internet
wants to be just what it is, and Mr. Grimes represents a management
team deeply rooted in conventional banking systems.
"I am never too impressed with the development of
technology for its own sake," said Mr. Grimes, 51, who worked for
Trust Company Bank, now part of SunTrust Banks Inc., for 12 years
as manager of computer systems and programming. He also served as
executive vice president of Servantis Systems Inc., the Atlanta
software company acquired by Checkfree Corp. in 1996. He said the
background gave him an appreciation "of banking as an industry and
its importance to people in this country."
Atlanta Internet Bank is one of four all-electronic
banks enticing customers away from traditional banks. It followed
by a year on the heels of Security First Network Bank, an Atlanta-based
on-line bank whose Security First Technologies unit develops and
sells on-line banking software technology to other banks. Security
First recently agreed to be acquired by Royal Bank of Canada.
TeleBank, which has been operating as a telephone-only
bank out of Arlington, Va., since 1993, went on-line in March, and
in July a Houston startup called CompuBank is expected to launch.
Customers are lured by the high yields paid on savings
and checking accounts, money market accounts and certificates of
deposit, low interest rates on loans and mortgages, lower monthly
fees, and the convenience of on-line banking. On-line banks say
they have a leg up on traditional banks because they have fewer
"The cost savings from not staffing and maintaining
buildings is so significant that we can share our profits with our
customers and investors, says D.R. Grimes, Atlanta Internet's chief
By comparison, Mr. Grimes says that a bank the size
of Atlanta Internet, which has $230 million in assets and 22 employees
at its sole location, would operate six to eight branches and would
employ an additional 30 employees. While the bank's 3% net interest
margin -- a bank's measure of profitability -- is lower than a typical
bank's 3.75%, Mr. Grimes says that because of lower expenses the
bank is actually twice as profitable.
Non-interest expense as a percentage of earning assets
-- an indication of overhead expenses -- runs about 2.8% at Atlanta
Internet, Mr. Grimes says, versus the 4.1% average that the Federal
Deposit Insurance Corp. says is typical of banks of up to $1 billion
in assets. Today, AIB has about 12,000 active accounts and $170
million in deposits - a number that Mr. Grimes expects to hit $230
million to $260 million by the end of the year."Internet banking
was an incredible breakthrough," said Mr. Grimes. "In the past year
and a half we have proven beyond doubt that the Internet is a successful
medium to deliver banking. It can be profitable and opens up an
Like most Internet start-ups, the bank has room to
grow. It lost $5.6 million last year but had no earning assets before
summer. Recent announcements have shown that AIB is well on the
road to profitability.
Net.Bank fields an average 1,200 e-mails a week and
opens 200 accounts on-line. The biggest drawback of the Internet
channel, Mr. Grimes said, is the lack of a true application form.
"I would still like to see us streamline account setup," perhaps
relying on digital signatures, he said. "It's not like buying a
book, a two-minute thing. We're asking people to entrust us with
The Internet is also the preferred advertising medium.
"It is cheaper to take an Internet customer and make him an Atlanta
Internet Bank customer than to find someone and teach them how to
use the Internet," Mr. Grimes said. "I believe we've done more marketing
on the Internet than any bank anywhere -- at least of this size."
Working with the agency K2 Design Inc. of New York,
Atlanta Internet has been advertising extensively since November.
Its banner ads appear on about 40 Web sites, including those of
Microsoft Investor, Money Magazine, Motley Fool, and Weather Channel.
"The numbers we have indicate that in November the
bank was getting 400 new customers a month, about 10% of its installed
base," said George Kivel, director of research for Mainspring Communications
Inc., a new Internet consultancy in Cambridge, Mass. "Since the
advertising campaign, Atlanta Internet Bank is getting about 800
new customers a month, a little more than 10% growth."
The analyst estimated the bank was spending a high
$180 per acquired account, but the average account balance exceeds
$15,000, and it is a savvy demographic, Mr. Grimes said. The average
Atlanta Internet Bank customer is 40 years old; a manager, professional,
or technical person; has an annual income over $60,000; and owns
The bank offers the common range of deposit and savings
accounts, overdraft protection, mortgages, other loans, and a Visa
check card. Credit cards will be launched this summer. It relies
on Nova Corp. for check clearing and statement production. Uvest
Investment Services has sold Net.Bank the rights to "private-label"
its Internet brokerage service. In the past month, Mr. Grimes said,
the bank added the "twist" of allowing securities to be purchased
by debiting a checking account.
Net.Bank does all this with less than 30 employees,
of which about 10 are in customer service, handling customers in
all 50 states plus about 100 from other countries. "We are the most
national of national banks," Mr. Grimes said. "We believe the one
thing that can differentiate us from the huge, monolithic banks
is customer service with a personal touch."
Because much of the operation is outsourced, chief
technology officer Tom Cable must manage external relationships
to keep service levels high. Bisys Group Inc. handles the account
processing portion of the Web site, and AT&T is the Web host
for marketing purposes.
Checkfree Corp. processes electronic bill payments
and ultimately will provide a bill presentment service. Edify Corp.'s
Electronic Banking System is the Web banking platform.
J. Robert Jones, senior vice president of business
development at Bisys, is also a stockholder in Net.Bank and a friend
of the founders. "The concept is great, the service is wonderful,
and it's always as close as your terminal," Mr. Jones said.
Mr. Grimes said he was pleased that Security First
is being sold to Royal Bank of Canada, because it competed for attention
with Atlanta Internet and lost money, which made it "difficult for
people to understand how we could make money."
"The key to being successful is to take our cost advantage
and give our customers higher interest rates on savings and our
shareholders higher profitability," Mr. Grimes said. Future revenue
opportunities could come from selling on-line mortgage application
software to brokers and from establishing a partnership with a travel
planner to serve customers over the Internet.
Mr. Grimes sees his strongest competitors as on-line
brokerage firms, though other Internet banks are expected to open
in the next few months. He points to Charles Schwab & Co. as
particularly "willing to experiment, test the limits, and offer
the strongest approach to complete financial management from the
customer's point of view."
But he added, "you don't have to be huge to be successful."
"We have the opportunity to cross-sell more than in
a physical branch, and we don't have to deal with the distribution
of products and services to branches," Mr. Grimes said. On the Internet,
"the customer is directly in touch with his banking records, and
there is no middle man."
Wall Street has rewarded the concept of Internet-only
banking. Shares of Atlanta Internet traded as high as $31 a share
in late April, nearly triple the $12 a share price of its initial
public offering that raised $35 million last July. Its shares traded
in the high twenties most of the second quarter.
Although the bank reported a two-cent a share loss
for the first quarter ending in March of this year, Atlanta Internet
says it had its first profitable month in March. And Christopher
Kelly, banking analyst for Morgan Keegan of Memphis, Tenn., projects
a four-cent a share profit on an operating basis for the second
quarter of 1998. Mr. Kelly is equally optimistic about its future
"To make money on the Internet is no small feat,"
he says. "Although
Atlanta Internet Bank has an awfully big chore ahead
of it, I think the day is coming when the Internet will be an accepted
delivery channel for banking services."
Atlanta Internet's Mr. Grimes isn't deterred by any
of the industry’s nay-sayers . "We're not a great bank for everybody,"
he admits. "But for customers who want high interest rates and low
fees, who want to pay bills on-line and look at statements
whenever they want, we're a good bank. I'm convinced
our customers come out ahead."
And so far, that fact has proven true both for AIB’s
customers as well as for Net.Bank’s shareholders.
BITS AND BYTES
- Florida A&M finance professor Larry A. Frieder,
in updating his book, BottomLine Banking, says the days of independence
are numbered for many Southeastern regional banks.
Regions Financial Corp., SouthTrust Corp., Union Planters
Corp., and Amsouth Bancorp are among 23 companies he believes are
headed for takeover. His research shows a great deal of excess capacity
in the banking industry nationwide, and that Tennessee and Alabama
are particularly attractive markets for consolidation. Bank revenues
are not large enough to cover expensesincluding necessary technology
spending and keep shareholders happy. Other companies making Professor
Frieder’s list of those headed for takeover include First Tennessee
National Corp., First American Corp., Compass Bancshares, Hibernia
Corp., Centura Banks Inc., and First Virginia Banks.
- In a recently published study titled "Transforming
Consumer Banking Through Internet Technology," the Financial
Services Practice of USWeb Corporation explores the growth of
online banking and examines ways in which financial institutions
can take advantage of Internet technology to offer
cost-effective banking solutions. In a study of 1,000
of the largest financial services companies in the United States,
USWeb found that 93% of US-based financial institutions plan to
deploy some type of Internet strategy within the next 3-5 years.
- Proving that you do not have to be a big fish
to swim in the Internet ocean, the $170 million-asset Britton
& Koontz First National Bank of Natchez, Mississippi not only
offers its customers the ability to bank from home, it has also
become an Internet Services Provider for its community. Not only
does it give the bank an adjunct to its core business, it helps
boost non-interest income while attracting home banking customers.
- National Commerce Bancorp of Memphis, which has
built much of its consumer strategy around supermarket branches,
has brought home banking to its customers on laptop PC’s. The
$4.9 billion-asset company is demonstrating its new Internet banking
software on laptop computers at its 109 branches in Tennessee,
Georgia, North Carolina, and Virginia. Over 5,000 customers have
signed up over the past few months, and new accounts are being
opened at the rate of about 50 per day.
- Robert H. Lessin, a high-powered investment banker,
is giving the nascent on-line financial services industry a major
dose of credibility. Mr. Lessin, formerly Vice Chairman of Salomon
Smith Barney, has joined Wit Capital Corp., a New York firm that
is spearheading the effort to deliver investment banking and brokerage
services over the Internet. Wit Capital, a two-year
old investment bank and brokerage firm that exists
only on the Internet, is essentially a capital-raising organization
with an on-line brokerage operation attached. It was founded by
Andrew D. Klein, the author of "WallStreet.com," who
in 1995 used the Internet to raise $1.6 million in start-up money
from 3,500 investors for his other firm, Spring Street Brewing
Finally, the BCS Marketing Department is
still very interested in testing a concept of an Edify-based IVR
application for the Financial Services industry in general or
the Credit & Collections industry in specific. This application
would use Edify’s Electronic Work Force to automate various consumer
financial services such as credit and collections inquiry functions.
If you know of a financial institution, a financial
services company, a Collection Agency or a bank’s Collections
Department in your market territory who might be interested
in participating in a pilot of this application, please contact
me at 404-728-7285. We can make it very attractive for your
customer to participate as our partner in this project as well
as make it very easy for you to close a reasonably sized sale.
Just bring us your most creative business applications and your
most innovative prospects. Thank you for your support of this
LATE BREAKING NEWS
Japanese Banking Crisis Continues
According to inside contacts, the Japanese banking
crisis shows no signs of ameliorating. If anything, it's getting
Following last week's news that Origami Bank had folded,
we are hearing that Sumo Bank has gone belly up and Bonsai Bank
plans to cut back some of its branches. Karaoke Bank is up for sale
and is (you guessed it!) going for a song.
Meanwhile, shares in Kamikaze Bank have nose-dived
and 500 back-office staff at Karate Bank got the chop. Analysts
report that there is something fishy going on at Sushi Bank and
staff there fear they may get a raw deal.